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Journal of Corporate Finance Vol. 85 2024

Foreign investors, firm level productivity, and European economic integration

Warren Bailey1,2,3,4,5; Gulnur Muradoglu; Ceylan Onay1,2,3,4,5; Kate Phylaktis1,2,3,4,5

1 Queen Mary University of London · 2 City, University of London · 3 Cornell University · 4 University College London · 5 University of Brighton

open access

Abstract

Using a comprehensive sample of listed and unlisted firms from 34 European countries, we study firm-level manufacturing outcomes conditioned on foreign investment, country characteristics, and EU membership. Higher foreign ownership is associated with higher productivity but lower employment, particularly when the host or source country is an EU member and scores high on disclosure and investor protection, and low on corruption. We confirm our interpretation using staggered EU accession dates and industry-level external financial dependence interacted with a financial crisis. The subset of Eastern European countries appears to benefit from foreign investment and EU accession without losing jobs. Nevertheless, manufacturing outcomes associated with survey findings on public sentiment towards globalization and migration confirm the social and political costs of globalization.

DOI
10.1016/j.jcorpfin.2024.102564
Volume
85
Pages
102564
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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